Private Equity Investment In Retail Properties May Double In 2016: Report

Private Equity Investment In Retail Properties May Double In 2016: Report

New Delhi: Private equity (PE) investment in retail properties is likely to double to $80 million this calendar year mainly on account of liberalisation of FDI policy, according to property consultant JLL India.

“The retail sector can look forward to a more cheerful 2016, given some good initiatives taken by the government,” JLL India Chairman and Country Head Anuj Puri said in a report.

In 2015, single-brand retail saw relaxation in sourcing norms, which is expected to rack up FDI inflows in the times to come. Moreover, 100 per cent FDI has been allowed in processed food retailing in this year’s budget.

“PE investment has been largely confined to a few retail players in India. In 2015, PE investment into retail properties alone was $39 million, and in 2016, it is expected to be in the range of $75-80 million,” Puri said.

Already, the FDI inflow in retail trading increased between October 2014 and September 2015 to $70.75 million, it added.

Economic stability, liberalisation of the FDI policy and improvement in the consumer sentiment will help global brands witness a very conducive environment for investment into Indian retail as well as in retail real estate sectors, JLL said.

“Add to this, the steady rise in shoppers’ desire to consume foreign brands due to increased brand awareness, and the scenario looks even more inviting,” the consultant said.

As more global brands are expected to enter India, the development of world-class malls, having superlative designs and ambience, would become the need of the hour, it said.

“Retail real estate has been constantly evolving in response to changing consumer, brands and retailers’ preferences but the evolution is bound to become faster in the days ahead. This will lead to emergence of stronger retail real estate players, who may manage to get private equity investment in the coming years,” JLL India said.

In 2016, PE may also go into select mall investments, especially in under-represented markets or for buyout of mature assets.